O2 plans broadband battle in pay-TV market

The mobile phone company O2 is seeking to extend the deals it has with media companies including Warner Bros, HBO and Paramount for its TV service in the Czech Republic to the UK, as it plans to go head to head with BT, Sky and Virgin Media next year in the British pay-TV market.

The company, owned by Spain's Telefónica, already has a residential broadband offering in the UK after acquiring Be Broadband a year ago. It now wants to add a TV service (received by the viewer through broadband), with trials starting next year. If successful, a full commercial launch could follow by the end of that year. It is using as a blueprint its service in the Czech Republic, where O2 owns both a fixed line and mobile phone operator. O2 TV offers 55 channels and has video on demand content from Warner Bros, Sony Pictures, Disney, Paramount and HBO.

O2 also has the rights to the national ice hockey league, the country's favourite sport. From a population of just over 10 million it has secured more than 70,000 customers since launching internet protocol television (IPTV) last September.

Broadband and mobile phone companies are increasingly looking at the provision of TV content as a way to persuade customers to spend more with them and keep them from defecting to rivals. The industry is in its infancy in the UK.

An O2 IPTV service will pitch the company up against its former parent BT, whose BT Vision hybrid Freeview and video-on-demand service has attracted 100,000 customers. The company maintains this is in line with its target, although rivals say it targeted "hundreds of thousands" by the end of this year.

Meanwhile, Tiscali, which acquired the IPTV pioneer Home Choice last year, has seen customers drop to 36,000 from 45,000. Mary Turner, UK boss, pledged it would have 200,000 by the end of 2008.